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Current Challenges Facing Commercial Construction Projects

Shortages of computer chips, delivery drivers and petrochemical products are causing major delays and increasing costs on construction projects.
By Kevin J. Riexinger
August 24, 2021
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Markets
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With construction crews (mostly) back to full strength and the “interpersonal challenges” triggered by the COVID-19 pandemic playing a lessening role, construction projects are facing new challenges causing major delays. There are three obstacles to completing projects on time and within budget.

Computer Chip Shortages

By now, most people are aware of the pervasive global computer chip shortage impacting the automobile and computer markets—but the shortage has affected the average construction site as well. The demand for computer chips has not waned.

When demand remains high and supply is lower, prices rise. Thus, the basic needs of a construction site (such as a generator to operate machinery, lights, etc.) have increased. Generators that used to take eight weeks to arrive on site are now taking as long as 20 weeks. The cause? Manufacturers no longer have easy access to computer chips needed for engines. Price increases coupled with delays in receiving the “chipped” products are creating major headaches in commercial construction projects.

Delivery Truck Driver Shortages

Unfortunately, shipping delays aren’t limited to computer chip products. While the lack of qualified delivery truck drivers has been an issue for 15 years or more in the United States, the recent pandemic caused a rapid expansion of the problem. Construction projects face significant roadblocks due to delays in shipping steel. The steel supply is not the problem. Due to a lack of truck drivers, it may sit idle at the manufacturing plant.

There are several reasons for lack of drivers. First, the average age of truck drivers has been increasing for many years. Naturally, the aging industry is retiring without the necessary influx of youth to replace them. This can be attributed in part to the fact that the last few generations of America’s youth have largely attended college. With the college educated workforce ever increasing, fewer truck driving apprenticeships are being filled. To further exacerbate that issue, there are estimates that only 2% of the applicants for long haul truck drivers are actually qualified to hold the job.

Additionally, the nature of the trucking industry has materially changed over the last 15 years with the ever-increasing online shopping industry. This too was kicked into hyperdrive by the pandemic with stores closing and people not wanting to leave their homes. With online shopping popularity booming, there is significantly more demand for home delivery drivers. In the past, most of the country’s delivery needs were limited to taking products from warehouses to big box stores. Now, qualified truck drivers are doing home deliveries for Amazon and other stores, which inevitably takes away qualified, able bodies to haul construction goods.

Another recent blow to the truck driving industry came in the form of stimulus payments and pandemic-related unemployment benefits. In some cases these protections obviated the need (or substantially lessened the benefit) for drivers to remain employed. Indeed, several articles addressed the fact that the federal stimulus initiative increased unemployment benefits to a point where it became more cost-effective for some drivers to stay home. Additionally, new legislation has been proposed that would extend federal unemployment insurance to workers who refuse unsafe working conditions due to COVID-19. If implemented, drivers may be able to continue collecting unemployment benefits well into the future.

Whatever the cause, a severe lack of drivers is currently causing paid-for construction materials to remain undelivered—halting work flow.

Petrochemical Product Shortages

Many people have taken notice of the increases costs of lumber and its impact on construction. Another major problem occurred when snow storms hit Texas in February 2021. Texas’ big freeze wreaked havoc on petrochemical plants, which causing severe shortages in numerous petrochemical products. This severely affected production of roofing systems.

Commercial roofing systems include insulation made with petrochemicals. Insulation manufacturing is dramatically backed up as are other roofing material components such as fasteners. Currently, roofing orders placed with major manufacturers (Carlisle, Firestone, Tremco, etc.) are delivering four to six months post-order, compared to four to six weeks pre-pandemic for the same roofing system.

These challenges continue to cause construction delays and a sharp uptick in liquidated damages claims. Construction project managers are finding themselves faced with a sea of paperwork making sure they carefully document problems in the supply chain in hopes of triggering force majeure clauses in their contracts.

by Kevin J. Riexinger
Kevin J. Riexinger is a Partner with the law firm of Gfeller Laurie LLP where he focuses primarily on the areas of complex civil and commercial litigation. He represents clients in commercial disputes and liability actions, including product manufacturers in lawsuits involving catastrophic losses, construction companies, engineering firms and design professionals. Kevin may be reached at: kriexinger@gllawgroup.com.

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